Renewing agricultural grasslands for improved yields and forage quality generally involves eliminating standing vegetation with herbicides, ploughing and reseeding. However, grassland renewal may negatively affect soil quality and related ecosystem services. On clay soil in the north of the Netherlands, we measured grass productivity and soil chemical parameters of ‘young’ (5–15 years since last grassland renewal) and ‘old’ (>20 years since last grassland renewal) permanent grasslands, located as pairs at 10 different dairy farms. We found no significant difference with old permanent grassland in herbage dry matter yield and fertilizer nitrogen (N) response, whereas herbage N yield was lower in young permanent grassland. Moreover, the young grassland soil contained less soil organic matter (SOM), soil organic carbon (C) and soil organic N compared to the old grassland soil. Grass productivity was positively correlated with SOM and related parameters such as soil organic C, soil organic N and potentially mineralizable N. We conclude that on clay soils with 70% desirable grasses (i.e., Lolium perenne and Phleum pratense) or more, the presumed yield benefit of grassland renewal is offset by a loss of soil quality (SOM and N-total). The current practice of renewing grassland after 10 years without considering the botanical composition, is counter-productive and not sustainable.